In the year 1920, the Government of Madras undertook an exhaustive enquiry about the living conditions of the workers who were not working in factories. The reason for this was that by that time the Government had already appointed one Chief Inspector of Factories and two Inspectors of Factories to look after the welfare and working conditions of the workmen employed in the factories and the workers outside the factories had nobody to take care of their welfare.

The officer appointed to conduct the enquiry was Sir George Paddison, I.C.S. He became the first Commissioner of Labour in 1920 charged with the duty of the betterment of labourers and the department under him came to be known as the Labour Department. In the same year as the Commissioner of Labour was already dealing with non-industrial labour he was found to be the officer best suited for dealing with Industrial Labour also.

The Government therefore, placed the Factories Department under the control of the Commissioner of Labour who thus became the head of both the Labour and the Factories Departments. Subsequently in the year 1987 the Factories Department was separated from the Labour Department.
Slowly the Department of Labour had expanded and it has on its rolls as on date.